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Levelised Costs Of Energy: are we comparing apples with durians?

By Geoff Carmody - posted Tuesday, 28 May 2024

The CSIRO recently published a report arguing that, all-up, nuclear power is roughly 50% more expensive than the cost of renewable energy power plus battery back-up.

It said it's used Levelised Costs of Energy (LCOE) as the metric for cost comparisons between different sources of energy.

It's important to ensure any energy cost comparisons are 'apples versus apples', not 'apples versus durians'.



First, ensure energy generation and storage equipment are costed over the same asset lives.

Second, ensure total power supplied over that asset life is the same for all energy sources.

Third, ensure that the amount of power supplied is consistent with current reliability standards.

Fourth, at the very least, ensure average supply intermittency is fully allowed for over asset life.

Fifth, use LCOE measures that include all generation, battery storage, and transmission costs.


The resultant LCOE measure is a ratio, comprising a numerator and a denominator.

Using nuclear, the denominator is reliable power supply over 80 years (or more).

The numerator includes all current and capital costs for generation, storage and transmission over 80 years.

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About the Author

Geoff Carmody is Director, Geoff Carmody & Associates, a former co-founder of Access Economics, and before that was a senior officer in the Commonwealth Treasury. He favours a national consumption-based climate policy, preferably using a carbon tax to put a price on carbon. He has prepared papers entitled Effective climate change policy: the seven Cs. Paper #1: Some design principles for evaluating greenhouse gas abatement policies. Paper #2: Implementing design principles for effective climate change policy. Paper #3: ETS or carbon tax?

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